Halfords faces a challenging period with flat sales and rising costs, urging government action on apprenticeships.
- The company’s first-half results show a 1.4% drop in pre-tax profit, highlighting economic strains.
- Amid a troubled cycling market, Halfords sees growth in its Autocentres division as a positive note.
- The recent UK Budget has imposed significant cost pressures, which the company aims to mitigate.
- Halfords plans to expand its Fusion Motoring Services despite short-term economic uncertainties.
Halfords is experiencing a period of economic challenge, marked by stagnant sales and mounting cost pressures. The company’s leadership is calling for crucial reforms to the apprenticeship levy as a way to offset these economic difficulties. Halfords’ recent performance report highlights a 1.4% decline in underlying pre-tax profits, now at £21.0 million, over the six months leading up to 27 September. During the same period, sales fell by 1% to £864.8 million, demonstrating the financial strains the company is facing. Like-for-like sales showed negligible movement, resting at -0.1%.
The company’s Autocentres division has emerged as a bright spot amidst a struggling retail sector. Despite the overall downturn, like-for-like sales in Autocentres grew by 0.8%, which contrasts with a 0.7% decline in the retail division. The retail sector’s performance is largely affected by ongoing challenges in the cycling market, which remains significantly below pre-pandemic levels at about 33% lower.
Amid these challenges, a major concern for Halfords is the financial burden introduced by the UK Budget, which has added £23 million in direct labour costs. Graham Stapleton, Halfords’ CEO, emphasises the impact of these costs on specialist retailers and calls for apprenticeship levy reforms as a means to help businesses like Halfords manage new economic pressures effectively.
Looking forward, Halfords is focusing on its Fusion Motoring Services strategy, which aims to create integration between its retail outlets and Autocentres. The company has ambitious plans to increase the number of Fusion locations to approximately 40 by the end of the current financial year. The programme has already shown promising results, achieving notable increases in sales and profits across 22 locations.
The recent economic forecast remains uncertain, with Halfords acknowledging potential short-term costs such as temporary garage closures to facilitate the Fusion rollout. However, the company remains confident in achieving its full-year targets by continuing to leverage its unique omnichannel platform and concentrating on controllable aspects like cost and margin optimisation.
Halfords remains committed to its growth strategy despite economic challenges, advocating for key industry reforms.
